Strike three: Bad data bury Eli Lilly's late-stage schizophrenia drug

Eli Lilly has thrown in the towel on one of its soured late-stage programs. Just weeks after conceding that its first big Phase III study of the schizophrenia drug pomaglumetad methionil, also known as mGlu2/3 and once dubbed LY2140023, had failed, the pharma giant ($LLY) says it's opted to scuttle a second study and write it off as a sure loser. Another mid-stage trial also failed.

Lilly says it will take a $25 million to $30 million charge for the latest clinical setback as it strikes off another high-stakes gamble on one of the toughest fields in medical science. But even as some big rivals have opted to steer clear of some segments of neuroscience research, including schizophrenia, Lilly still feels that it has good reason to forge ahead.

"While there are many challenges in this complex field of research, neuroscience remains a core area of focus at Lilly," says Jan Lundberg, Ph.D., Lilly's executive vice president, science and technology. "Our clinical development pipeline includes nearly a dozen neuroscience molecules being studied to treat illnesses such as depression, bipolar disorder and cognitive impairment associated with schizophrenia."

In just a matter of days Lilly has been forced to concede that its Alzheimer's drug solanezumab had failed to hit its primary endpoints in one of the biggest Phase III trials in the industry. (Lilly insisted that a secondary analysis demonstrated promise, triggering some harshly skeptical responses among the experts in the field.) Then came news that its efforts to expand the market for Effient ran into a brick wall when it failed a head-to-head study with Plavix. Earlier in the month its drug Forteo failed a comparative study for pain among post-menopausal women. And now its attempt at a new approach to treat schizophrenia is officially a bust.

Eli Lilly pursued the development of this schizophrenia drug despite its failure in a Phase II placebo study back in 2009. "Intriguing preliminary data suggest it could be possible to identify a subpopulation of patients which responds better," Lundberg told TheWall Street Journal last year.

These clinical failures will likely raise another round of questions about the leadership of CEO John Lechleiter, a champion of the company's R&D division and a low-key player on the deal-making side of the business. As rivals have rushed to spread risk and seek new partnerships, Lilly has largely stuck it out, paying billions on research each year for internal projects. But a string of failures has left Lilly with little to show for the effort at a time generic competition is cutting into its revenue.